Cases
DS161 and DS169: Appellate Body and Panel Reports on
“Korea — Measures Affecting Imports of Fresh,
Chilled and Frozen Beef”. Case brought by Australia
and the US with Canada and New Zealand as third parties.
Back
to topThe
Dispute Settlement Body adopted the Appellate Body report
and the panel report as modified by the Appellate Body in
this case. The Republic of Korea was found to have
violated various WTO agreements. It was found to have
discriminated against imported beef (violating
“national treatment” in GATT) by requiring
imported beef to be retailed separately from domestic
beef i.e. through specialist stores, and it was found to
have incorrectly calculated its domestic support
incorrectly under the Agriculture Agreement.
Australia
and the United States welcomed and supported the adoption
of the reports. The United States noted that these were
the first Reports to address the domestic support
provisions of the Agriculture Agreement.
The
EU disagreed with the treatment of Korea in this case as
a developing country for the purposes of the Agriculture
Agreement. It emphasized that Korea’s economic
situation could not justify developing country status
under any of the WTO Agreements.
Korea
expressed some reservations about certain findings but,
nevertheless, joined in the consensus to adopt the
Reports. In accordance with Article 21.3 of the Dispute
Settlement Understanding (DSU), Korea will have to
indicate its intentions about implementing the findings
within the next 30 days.
Case
DS165 United States — Import Measures on Certain
Products from the European Communities. Case brought by
the EU Back
to top
The
Dispute Settlement Body (DSB) adopted the Appellate Body
report and the panel report as amended by the Appellate
Body.
This
case arose as a consequence of the banana dispute (case
DS27). It also reflects a problem that has become known
as “sequencing”. The subject of the case was a
US measure of 3 March 1999 that was the subject of this
case.
In
brief, in September 1997, the DSB decided that the
EU’s regime for banana imports violated WTO rules.
The EU had until 1 January 1999 to correct its banana
regime.
On
2 February 1999, the US complained that the EU had not
complied with the DSB’s rulings, and asked for
authority to impose sanctions. However, a number of
questions and concerns were raised about the lack of
clarity in how Art.21.5 (examination of compliance) and
Art.22 (authorization to retaliate by imposing sanctions)
of the Dispute Settlement Understanding (DSU) should be
interpreted, and the sequence in which they should be
applied. The US and the EU could not agree on an
interpretation on how to proceed.
On
29 January 1999, the US and the EU agreed on an ad hoc
procedure (applying only to the banana case) which was
also adopted by the whole DSB. They agreed that the
US’s request for sanctions would be referred to
arbitration (under DSU Art.22.6) to determine whether the
level of the proposed sanctions was justified. They also
agreed that this arbitration would be carried out by the
same individuals who were already engaged in Art.21.5
proceedings (i.e. to examine whether the EU had
complied).
On
2 March 1999, the arbitrators informed the DSB that they
needed more information and more time to complete their
work.
On
3 March 199, the US announced measures that would require
importers to place bonds covering import duties of 100%
on the European products the US was proposing for the
sanctions. The US said it had to do this in order to
ensure it was within the timetable set out in the rules.
These bonds would be held, in the US’s words
“to preserve [the US’s] right to impose 100%
duties as of 3 March, pending the release of the
arbitrators’ final decision.”
The
following day, 4 March 1999, the EU launched a new case
(DS165), arguing that the measure was illegal.
Meanwhile,
on 9 April 1999 the arbitrators ruled that the proposed
sanctions were too severe. On 19 April 1999 the DSB
authorized the US to impose sanctions within the limit
set by the arbitrators, and the US did so by imposing
100% duties on some but not all of the products for which
the bonding requirements had been announced.
This
case, then, is about whether the US’s 3 March 1999
bonding requirement was legal. Both the panel and
Appellate Body said it is not about the actual sanctions
imposed on 19 April 1999. The panel was established on 16
June 1999, and ruled on 19 April 2000. The bonding
requirement was found to violate WTO agreements.
Both
sides appealed some of the legal interpretation. The
result, briefly, was that the US’s 3 March 1999
action was found to violate the Dispute Settlement
Understanding because the action was taken before there
had been a ruling on whether the EU was still failing to
comply in the banana case.
The
Appellate Body also said it was not its role to sort out
the “sequencing problem” and that only WTO
members could do this.
In
the DSB meeting on 10 January 2001, All delegations who
spoke (Argentina, Canada, Ecuador, the EC, Jamaica,
Japan, also on behalf of Chile and Colombia, Korea, New
Zealand, Norway, Saint Lucia, Switzerland, the US and
Hong Kong, China) welcomed the Appellate Body’s
confirmation that only members can amend or interpret the
DSU rules and provisions.
Several
countries stressed the need to re-start discussions on
the issue of sequencing, based on a proposal submitted to
the General Council by several of them on 10 October
2000.
The
EU welcomed the rulings. The US States said it was
satisfied that both the reports had correctly affirmed
that the measure at issue was no longer in effect.
The
chairperson said that further opportunities to exchange
views on this matter would depend upon the General
Council consideration of the 10 October 2000 proposal.
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